Krafton U-Turns In Its Lawsuit Against Unknown Worlds Founders On One Of Its Key Arguments Regarding Subnautica 2

Update 16/03/2026: A Delaware Judge has ordered Krafton to reinstate Ted Gill as CEO of Unknown Worlds, ruling in favor of the Unknown Worlds co-founders. Read the full story here.

Update 22/09/2025: Post the publication of this article, Krafton reached out to Wccftech to provide its statement on the latest update with its legal battle against the Unknown Worlds founders and its sudden change in argument around the relevancy of Subnautica 2 being ready for an early access release.

It doesn't seem to provide an explanation for why Krafton suddenly removed one of its previously key arguments from its case and shifted to a different theory. Instead, it calls out its opposition for making "overly broad" requests for information that it deemed "beyond what is relevant" to the case.

Here's the full statement from Krafton:

"Krafton believes the discovery requests made by the former executives are overly broad and extend beyond what is relevant to the core issues. We have complied, and will continue to comply, with all of the court’s rulings on discovery. We remain focused on developing Subnautica 2 and delivering the best possible experience to players."

Original Story:

Back in October 2024, Krafton and Unknown Worlds announced that Subnautica 2 would be launching in Early Access sometime in 2025. But as we passed the halfway mark of the year, a flurry of unexpected events happened.

It's been some time since we've heard an update regarding this suit, and in between the last update and today, Gamescom 2025 happened, Silksong was released, and SEGA brought back its 80s/90s-era tongue-in-cheek ad campaign against Nintendo around its latest Sonic Racing game, to name a few things. So you'd be forgiven if you need a refresher. There's a recap at the bottom of this article if you need it, but for now, let's jump into what's current.

As reported by GamesIndustry.Biz, two of Krafton's requests have been denied by the court: a forensic inspection request and a compelling preservation order, with both being deemed "unnecessary." But more importantly, the denial comes largely due to Gill, Cleveland, and McGuire claiming that Krafton has suddenly changed one of its key arguments.

When Krafton fired the three co-founders, one of the reasons cited in the termination notices was the claim that Gill, Cleveland, and McGuire were trying to release Subnautica 2 before it was ready. That makes sense, since Krafton has claimed time and again that the game simply wasn't ready for its early access launch.

Now, Krafton has changed its argument and has "pivoted to a new theory that it admittedly came up with only after the fact: that it terminated the Founders and seized control because the Founders backed up files they were entitled to access in their work for Unknown Worlds," says Fortis Advisors, the group representing the co-founders.

"Krafton's disorganized retreat raises more questions than answers. To say Krafton's new theory is a Hail Mary would be an understatement - both because the downloads were not wrongful and because Krafton claims not to have learned of them until after it had fired the Founders. The downloads cannot have been the actual motivation for termination."

So, suddenly, it seems that according to Krafton, in this lawsuit, which was filed against them around Gill, Cleveland, and McGuire, alleging, among other things, that they were wrongfully terminated, and where Krafton initially claimed they were terminated because they tried to launch Subnautica 2 before it was ready, the subject of Subnautica 2 being ready or not for launch is not relevant.

Adding to that, the question of Subnautica 2's readiness for launch wasn't why Gill, Cleveland, and McGuire were fired. They were fired because of something Krafton learned about after they had already fired them.

Per a report from PC Gamer, Krafton is now trying to focus on its claim that the co-founders abandoned their roles, and even the judge presiding over this case is confused by Krafton removing its argument that the co-founders tried to release the game early. "Well, that's something that we definitely need to get to the bottom of today, because that is precisely what was cited as the reason in the answer," said Judge Lori W. Will during a meeting between both sides to deliver a ruling on the motions presented.

PC Gamer also reports that Krafton hasn't been entirely cooperative as this suit kicks up, previously refusing to confer with Fortis Advisors, and only offering what Judge Lori W. Will described as a "very narrow" selection of emails for evidence, only offering ones where the words 'termination' and 'earnout' appeared.

The case is moving forward with both parties agreeing to confer, and we're back to waiting for the next major update.

To say that this has been a messy situation is yet another understatement to tack on to Krafton's alleged 'Hail Mary.' As I've mentioned before, it's unlikely we'll learn the whole truth of the situation, as allegations on both sides seem dire, even if there's a bit of truth to them.

We'll continue to provide updates when new information is available. If you need a recap of what's happened before this, you can view it below.

• On July 2, it was reported that the founders of Unknown Worlds, Ted Gill, Max McGuire, and Charlie Cleveland, were fired and replaced by former Striking Distance Studios head Steve Papoutsis. No concrete explanation for their dismissal was offered at the time, with Krafton instead emphasizing its commitment to delivering a game that players deserved.
• On July 3, a statement from the Unknown Worlds website did its best to calm concerns from fans about the fact that the three original core creatives behind Subnautica were suddenly not at the studio.
• The next day, on July 4, the situation began to grow even more confusing, as Cleveland claims Subnautica 2 was "ready for early access release" and that his and his fellow co-founders' dismissals were "quite a shock."
• Five days later, on July 9, a report from Bloomberg adds a shocking allegation to the mix: that Krafton was delaying Subnautica 2 to avoid paying Unknown Worlds a $250 million bonus the studio would have been owed if they hit particular sales goals, which they would have done with Subnautica 2's launch. The delay was confirmed hours after the report went live, and Krafton held that the delay was due to Subnautica 2 not being ready, citing feedback from internal playtesting.
• On July 10, Krafton went on the offensive, blaming co-founders Gill, Cleveland, and McGuire, claiming they had "abandoned" their roles to pursue personal interests. Krafton also clarified that 90% of the aforementioned $250 million bonus would go directly to the co-founders, with the rest to be split among the employees. Gill, Cleveland, and McGuire held that they always intended to distribute the bonus to other employees.
• Also on July 10, Gill, Cleveland, and McGuire filed a lawsuit against Krafton.
• On July 11, an internal document from a milestone review of Subnautica 2's progress leaked on Reddit, seemingly showing further support to Krafton's claims that the game wasn't ready, citing a lack of content on top of previously mentioned internal playtest feedback.
• Over the following weekend on July 13, Krafton confirmed the documents to be real.
• A few days later, on July 17, when the co-founders' suit against Krafton became publicly available, we discovered allegations that Krafton had been sabotaging Subnautica 2 to ensure it would be delayed. There was even a claim that the CEO of Krafton met with the co-founders and admitted that having to pay out the $250 million bonus "could be disastrous financially and hugely embarrassing for Krafton." It also attacks every other claim Krafton had made up to this point, and that the feedback received on Subnautica 2 playtesting "unequivocally proved" the game was ready for an early access launch.
• Jumping ahead to August 12, Krafton shoots back at Gill, Cleveland, and McGuire's lawsuit, again arguing that the co-founders were absentee leaders who abandoned their roles, and continued to hold that the game wasn't ready for an early access launch.
• Eight days later, Unknown Worlds files its own separate lawsuit against its co-founders, telling Wccftech in an email that this suit "is a direct response to their misconduct, including the theft of confidential information and attempts to pursue personal financial gain to the detriment of the company's interests."

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